TAIPEI—Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip manufacturer by revenue, said strong wafer shipments propelled a 65% rise in second-quarter net profit.

The company also raised its capital-expenditure goal for the year, in a sign of improving market conditions across the semiconductor industry.

TSMC said second-quarter net profit rose to 40.28 billion new Taiwan dollars (US$1.26 billion), or NT$1.55 a share, from NT$24.44 billion, or 94 new Taiwan cents a share, a year earlier. Consolidated revenue rose 41% to NT$104.96 billion. The company expects third-quarter revenue in a range of NT$109 billion-NT$111 billion.

The company’s latest results come amid a recovery in the semiconductor industry, as growing customer demand for electronic gadgets such as smartphones and tablet personal computers boosted chip sales. In recent weeks, chip giant Intel Corp., which is seen as a bellwether for the global technology industry and a barometer of corporate demand, also posted strong results. TSMC makes chips for companies including Intel, Advanced Micro Devices Inc. and Texas Instruments Inc.

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